Diddy has worked his way into a hell of a 50/50 deal with the good folks over at Diageo, the owners of Ciroc Vodka. It seems that if Ciroc continues to grow at the pace of last year’s shipping reports Diddy will be seeing some checks in the nine figure area over in the next few years. Check out bloomberg’s report on the deal:
Ciroc and Ketel One are pricier alternatives to Diageo’s Smirnoff. Ciroc volume sales climbed to 400,000 cases in the year ended June 30 from 60,000 cases in first half of 2007, the year that Diageo teamed up with Sean Combs. Diddy’s fellow rappers Snoop Dogg, Dr. Dre and Jay-Z all have endorsement deals with liquor brands in the U.S., while Combs is “a true partner” and receives half the brand’s profits, Strachan said.
The recent success of the Ciroc venture still pales in comparison to Smirnoff, which was the first premium-spirit to surpass 25 million cases of sales in 2008. Diageo also plans to release a new Ketel One flavor to add to its citrus variety in 2010, Nolet said.
The premium-vodka market is made up of about 100 million cases of bottles that sell for more than $8. That doesn’t include the estimated 400 million cases of lower-priced local brands sold each year, predominantly in Russia and eastern Europe, said Philip Gladman, Smirnoff’s global brand director.
Diageo’s Ciroc vodka, an equal-share venture with Combs, is set to release coconut and red-berry varieties in the U.S., Marc Strachan, the brand’s marketing director, said at an Oct. 28 presentation in Schiedam, Netherlands. Ketel One, the local vodka maker in which Diageo bought a 50 percent stake for $900 million last year, plans to enter 15 new markets including Brazil and Australia by the end of June, said Bob Nolet, vice president of the Nolet Distillery, where it’s made.
Vodka accounted for 11 percent of Diageo’s 12.3 billion- pounds ($20.4 billion) revenue last year. Organic sales — which exclude acquisitions and currency movements — of Diageo’s Johnnie Walker and Tanqueray gin fell in the year through June, while sales of Smirnoff, which leads the $36 billion premium- vodka market, rose 2 percent.
